The conflict in the Gulf and the subsequent return of many Indian expatriates, has awoken many Bharatiyas to the pertinence of geopolitical risk when considering their ‘expatriate dream’. For many expatriates, the primal fear of hearing missiles and fighter jets in action jars disconcertingly with the carefully-constructed lives they lived in cities like Dubai, sometimes described as the ‘City of Gold’. Conversely, for many in Bharat, this has led to a sense of schadenfreude from those who chafed under expatriate superciliousness – possibly augmented by some degree of jealousy. Yet, while geopolitical risks fluctuate, a far more prosaic and longstanding source of migration risk remains under-discussed: cost-of-living differences.
In fact, with the Indian rupee hitting new lows over the last year amidst economic pressures arising from trade tensions with the United States and the Iran conflict, dealing with this source of risk should take on added urgency. When the war ends – as all wars must – economic stress in Bharat and a weak Indian rupee may combine to make overseas migration seem even more attractive in plain exchange rate terms, even if the real picture is far more complicated.
Consider someone on a 40 lakh annual salary in Bharat, who is offered a job paying S$80,000 in Singapore. At the current exchange rate, that converts to nearly 58 lakh rupees – a nearly 44 per cent jump in salary. Combined with online information on good schools, clean air and efficient public transport in Singapore, it is easy to see why many are seduced by this seemingly win-win situation that offers both financial and lifestyle improvements.
Yet, this doesn’t account for the significantly greater cost-of-living expenses in Singapore, where a cheap coffee costs the equivalent of 360 rupees and a short Grab ride might cost around 900 rupees – which could get one from Navi Mumbai to Mumbai airport on Indian Uber. Similarly, migrants find themselves paying a premium of at least four to five times for domestic help, outstripping their less than 50 per cent salary jump. Without a clear understanding of cost-of-living changes, then, a seemingly large salary jump can still result in Indian expatriates being worse off in real terms because their costs have grown more than their income.
Consequently, many find themselves experiencing serious financial struggles and lifestyle compression, leaving them in a catch-22: accept a significantly curtailed lifestyle overseas or lose ‘face’ if you return to India. Indeed, the growing prevalence of videos highlighting the seemingly-exorbitant rupee costs of rents in developed nations, exemplify the general lack of public awareness on this front. On Facebook groups and social media sites, one often sees posts where migrants are looking for monthly rental budgets that are far below what is standard, leading to compromises including shared bathrooms or room-sharing that they would not have accepted in Bharat.
Conversely, videos also abound of Indian expatriates working overseas in blue-collar jobs and emphasising how their salary, when converted into rupees, is equivalent to a white-collar salary in India. Both these narratives are misleading. Neither take into account cost-of-living differences or the well-acknowledged fact that plain currency exchange rates are not good tools to understand relative financial security or lifestyle quality in different countries. If not exchange rates, how should potential Indian expatriates assess whether migrating would leave them financially better off?
A convenient solution can be found in economics, in the form of implied Purchasing Power Parity(PPP) conversion rates which account for these cost-of-living differences. These are produced by prominent organisations, such as the International Monetary Fund(IMF). Using the IMF PPP conversion rates, one has to earn around S$250,000 in Singapore to be equivalent to the same 40 lakh salary – a much bigger stretch. Conversely the S$80,000 salary gives you approximately as much purchasing power as someone earning around 21 lakhs per annum in India. Instead of a 44 per cent salary jump, one experiences a near-halving of purchasing power – substantially shifting the cost-benefit calculus on moving overseas.
Naturally, like every economic tool, PPP conversion rates are not perfect – for instance, someone living in New York faces substantially higher living costs than someone in South Dakota – but still offer a more realistic metric for understanding the value of an overseas package. Having potential migrants make a better-informed decision about moving overseas has broader benefits for Bharatiya society and government. At present, the migration debate in India is largely presented as a rigid binary: either it is damaging brain drain or it helps build a diaspora that drives remittances and bolsters Bharat’s global standing.
Yet, it is quite intuitive that reality is far more complicated. For migrants who expand their networks and career growth overseas, whilst retaining links to Bharat, the situation is a win-win. Conversely, for engineers and accountants who face financial struggles or end up driving Ubers instead of working in their field of study, their squandered potential becomes a net negative at the personal and national levels. Narrowing the information gap, then, has benefits for all.
This is where the government has a key role to play, by helping to shift the framing of the migration debate towards whether an individual Indian citizen considering migration will be better off for it. As a first step, the Ministry of External Affairs(MEA) should setup a portal that leverages international databases to allow Bharatiyas to directly convert salaries in PPP terms in either direction. This will help bridge the information gap on financial risks, by giving people a better sense of the relative standard of living that they can expect.
Over time, this can be expanded to covering other forms of risk – incorporating evidence from MEA’s own travel guidelines – including crime and safety, religious freedom, domestic instability and violent racism. This could also serve strategic interests by acting as a soft power tool, akin to US State Department Travel Advisories which have acquired global reach and guide both individual behaviour and engagement with foreign governments.
Ultimately, migration is a multi-faceted decision with complex variables, including distance from family and friends, opportunities for career advancements, lifestyle changes, environmental changes and many others. Yet, it serves both individual and national interests if people make this decision with a clear understanding of what they are getting into and it behooves the government to close these information gaps to maximise national potential. Better informed people leads to better prepared migrants that maximise their potential overseas – and that would be a win for Bharatiya society as a whole.
